How to calculate P/E ratio?

Formula: P/E = Price ÷ EPS
Meaning: How many years to recover investment at current earnings.
Reference: Generally 10-25 is reasonable. Varies by industry.
Limitation: Not applicable to loss-making companies.

P/E = Stock Price ÷ EPS. Example: Price 50, EPS 2.5 → PE = 20.

What P/E is reasonable?

Generally 10-25 is reasonable for A-shares. Banks typically <10, tech may exceed 30.

Negative P/E means the company is losing money. Use other valuation metrics instead.

Calculate Price-to-Earnings ratio and assess whether a stock is over or undervalued.

Stock Price

Earnings Per Share (EPS)

P/E Ratio

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